Careful drafting crucial for articles of incorporation

All business corporations and commercial companies derive their existence from the relevant company law.

Each corporation/company, does have articles of incorporation (Articles of Association).

Legally speaking, the articles of incorporation serve the same purpose as a charter or a by-law of the corporation.

The articles are rather like a constitution in that they constitute the basic document of the corporation and the major source of its powers.

Due to the importance of such legal document, there is a requirement that it should be properly and accurately drafted.

Better to keep away from cut and paste as the document will be tailored to give the exact dress that suits the corporation.

In this respect, there are certain major points that should be included in the articles.

This includes, the name of the corporation which must not be descriptively similar to any other corporation registered earlier to avoid any discrepancies.

The number of shares of capital that the corporation will have authority to issue. The purpose of the corporation or in other word the objectives of the corporation.

The address of the initial registered office of the corporation. The name and address of each incorporator. Full transparency is required particularly in connection with the above points.

In addition to above major points, the below can also be added in the document, such as the duration of the corporation (mostly perpetual), the par value of the shares of the corporation, any additional provisions that are needed but not inconsistent with the law, this may include, dividend rights and quorum requirements as well as procedures for the selection and removal of directors.

It would be essential to mention that the corporation will not exercise nor undertake any activity outside or other than the objectives enumerated in the articles of incorporation, otherwise such act or activity will be deemed as illegal or ultra vires due to the fact that they are out of the authorised jurisdiction of the corporation.

After concluding the articles of incorporation, the document will be presented to the concerned official competent body for necessary approval. This is required to make sure that the new corporation is a legitimate body as per necessary laws and procedures. The law specifies certain time wherein the competent authority will endorse the approval to start business.

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